In 2012, Forbes tested Burton Malkiel’s famous claim that “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts.” Results? On average, 98% of monkey portfolios beat the 1,000 stock capitalization weighted stock universe each year!
So, how can wealth managers compete with sheer luck (not to mention dart skills)? By using their key advantage over monkeys: quality data.
But what does it actually mean?
Let’s assume we have a client on the phone and we need to make a quick decision: do we invest in portfolio A or portfolio B? We quickly look at performance charts to see which one has enjoyed a better growth and we see the following:
As you can surely tell, both charts show exactly the same data. The only difference is the starting value on each of the axes. But would you notice it in the evening after a long and stressful day of work? That’s why it is crucial to work with data that are standardized and – ideally – aggregated in a single application.
But aren’t we already receiving them from banks, our long-term, trusted business partners? Of course – and this is where another issue lies: data consistency.
Banks tend to present certain data, e.g., value of frozen assets, in their own, unique ways. One bank may decide that these assets' value stays the same, another may assume that money from such equities is no longer recoverable and will present it as a loss. And that’s perfectly all right – there’s no rights and wrongs here – but what one should keep in mind is that presenting data in a consistent manner will prevent you from making wrong decisions.
Following certain best practices that allow for standardization will ensure data consistency. And who can be better at this than an experienced data analyst who does data accuracy and integrity checking on a daily basis?
As you know, in the wealth management world things are moving fast. Even if you have the most precise report, it will not be of much use to you if it’s dated. You need to work on data that is up to date at all times. In our industry hours ago is ancient history!
For example: if you need data about CE Brent Crude futures contract in portfolio xyz, you need it now, and you need it to be current. Also, bear in mind that what looks like an asset losing its value may actually be the opposite – if the stock market price has gone up in, say, USD and at the same time the USD value to CHF has dropped, this may look like a loss while in fact it isn’t. And you need timely reporting to figure it out.
Instant access to the highest quality data tailored for current problems is crucial if your decision-making process has to be successful.
Guess what: WealthArc can provide you with data that have all the above mentioned characteristics. We deliver data from almost 100 banks on assets worth over 15 billion AUM to almost 500 end users. Our solution is used daily by hundreds of wealth management professionals every day, saving their precious time and generating accurate, consistent and relevant reports in hours rather than days.